Nov 13, 2018

U.S. Trade Tensions with China Not Yet Impacting Most Vendor Relationships, According to Financial Professionals Surveyed by Dun & Bradstreet

Respondents say 2018 tax reform is the most impactful event on corporate finance operations since the President took office

SHORT HILLS, N.J., Nov. 13, 2018 /PRNewswire/ -- Results from a Dun & Bradstreet (NYSE: DNB) survey of finance professionals show that two in three (65 percent) companies are not seeing U.S. trade tensions impact their relationships with Chinese vendors, despite highly publicized tariffs and trade negotiations. Of the remaining 35 percent who are experiencing challenges, only five percent have actually changed their payment practices as a result. The survey was fielded at the AFP 2018 Treasury & Finance Conference in Chicago, IL, last week.

Even when looking at tariffs and trade tensions globally, respondents did not indicate that this was a top concern for finance departments. Just 13 percent cited international tariffs and trade agreements as the most influential event on their finance operations since 2016. Instead, the 2018 tax reform had the largest impact on corporate finance, as selected by one-third (33 percent) of respondents.

The tax plan was followed in respondent popularity by Federal interest rate hikes (22 percent), internal technology adoption such as RPA, ML and smart contracts (15 percent) and then international tariffs and trade agreements. Less-cited answers included market corrections (9 percent) and the FASB's new revenue recognition standard, or ASC 606 (8 percent).

Rate Hikes Won't Influence Cash Management for One-Third of Companies

Despite rate hikes taking second place on the list of corporate finance's most influential events since 2016, 37 percent of respondents do not expect to change their cash management practices if the Fed were to continue to raise rates up to three percent by 2021. Of those who would make changes, 34 percent would hold more cash on their balance sheets, 21 percent would decrease their credit utilization, 18 percent would seek fewer sources of credit, 18 percent would demand earlier payments from their buyers, 11 percent would adjust their target credit rating and just five percent would offer fewer sources of credit to their buyers.

"If inflation continues to rise as anticipated, businesses not considering the impact on cash reserves and credit availability could face a chain reaction impacting their ability to pay bills on time – and ultimately, this would impact their credit rating and access to further capital," said Eric Dowdell, Global Head of Trade Credit at Dun & Bradstreet.

Online Payments Top Blockchain in the Future of B2B Payments

With technology adoption having the third largest impact on corporate finance, respondents were asked about their predictions for the future of payments technology. Nearly half (44 percent) of professionals believe that B2B payments will be dominated by online payment platforms or e-checks by 2028; this is followed by 26 percent choosing the hotly-discussed blockchain technology and smart contracts. Credit cards fell behind these newer options, but 17 percent of those surveyed have faith that cards will continue to rein supreme in B2B payments a decade from now.

As follow-up, Dun & Bradstreet asked professionals if their company had already adopted the technology they selected as the most common B2B payment method in 10 years. Half (49 percent) said yes, and 22 percent say their companies do have a plan to adopt the technology. But, respondents who selected blockchain as the future dominant payment method fell far behind these numbers; only 20 percent work for companies who already use blockchain for B2B payments. The remaining responses were about evenly divided on whether their companies had a plan to adopt blockchain for B2B payments in the future (34 percent) or not (32 percent).

"We're likely about to see a significant surge in blockchain-enabled B2B payments, though implementation and ease of adoption remain challenging for businesses," said Dowdell.   "Online payment methods are clearly more established, but their evolution in the B2B space – particularly as it relates to issues like cyber-security or payment terms – will be an interesting space to watch."

Dun & Bradstreet conducted this research at the AFP 2018 Treasury & Finance Conference, held November 4-7, 2018, in Chicago, IL. The 158 respondents self-reported as working in corporate treasury (59 percent), corporate finance (18 percent), accounting (11 percent), the C-Suite (5 percent), business development (4 percent) and IT (3 percent).

About Dun & Bradstreet
Dun & Bradstreet, the global leader in commercial data and analytics, enables companies around the world to improve their business performance. Dun & Bradstreet's Data Cloud fuels solutions and delivers insights that empower customers to accelerate revenue, lower cost, mitigate risk, and transform their businesses. Since 1841, companies of every size have relied on Dun & Bradstreet to help them manage risk and reveal opportunity. Twitter: @DnBUS

Media Contact:
Deborah McBride   

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